Use reserves or raise taxes in Mech’ville

The City Council will meet Thursday to accept comments and vote on a 2012 city budget that depends on reserve funds to comply with the state’s new tax hike restrictions.

The proposed $4.83 million spending plan would increase the city’s tax rate by three percent, but still fall within New York’s two percent tax cap because some of its pension cost increases are exempt from the cap.

The plan calls for using $467,415 in reserve funds. The city has budgeted more than $1.2 million from its rainy day account the last two years – spending $705,000 in 2010 and an estimated $533,000 this year – according to budget documents. None of the council members could say exactly how much reserve money remained in the account.

Accounts Commissioner Mark Seber said in an interview that it contained “about $2 million” at the end of 2009. More than $1.7 million of that will be exhausted by the end of 2012, according to city budget numbers and projections.

“It’s a concern for everyone,” Seber said. He warned that coming years would get only more difficult under the state’s tax cap laws because the city could run out of reserve funds in trying to meet the tax cap.
Last week, Mayor Anthony Sylvester and Finance Commissioner Peter Chauvin tried to pass a local law to override the cap’s limitations, but were defeated in a 3-2 City Council vote.

A majority of the council instead made cuts to the preliminary 2012 budget, which had carried an 18 percent tax rate hike, and opted to use the nearly half million dollars in fund balance revenues. A vacant mechanic’s position was eliminated and a custodial position reduced. Building permits will cost slightly more under the proposed budget.

Sylvester said he expected the City Council to pass the revised budget after a public hearing is held at 3 p.m. Thursday in the Central Fire Station. The plan would increase spending by less than one percent over 2011. It would raise the city property tax rate to $13.69 per $1,000 in assessed value, up from $13.28.

Two major projects totaling up to nearly $2 million will be brought as a capital project and discussed with the community later this year, Seber said. Those projects call for dredging the Mechanicville Reservoir of silt and sediment to improve the city’s water output and installing new water meters on households and businesses.

The small city’s largest expense continues to be its police department, which accounts for nearly one-third of the 2012 budget when health and retirement benefits are included.